The accounting revenue division in international telecommunications: Conflicts and inefficiencies

Abstract

This paper examines characteristics of the accounting rate system, by which international telecommunications carriers settle account imbalances arising from communication traffic flows. We analyze how differences in demand, technology, and market structure affect traffic and payment imbalances, and resulting conflicts regarding accounting rates between carriers of, say, developed and developing countries. We do this by employing a theoretical analysis which complements previous empirical analyses. Unlike many existing works that discuss inefficiencies of current accounting rates and possible solutions from the perspective of trade-deficit countries, we attempt to address the distributional aspects among carriers of different countries in a game-theoretic setting.